The legislative year starts at the beginning of September. From September to December, each legislator decides what they want to introduce for the next year. Below is a Legislative Request that I sent for the 2023 session.

November 29, 2022

Dear Governor Newsom Staff, GovOps Staff, Senate Governance and Finance Committee Members and Staff, Assembly Committee on Revenue and Taxation Members and Staff, and FTB Legislative Staff:

I request that you immediately change California State law to recognize married couples as one tax entity in accordance with the guidelines set forth by the IRS. 

The IRS treats married couples as a single taxpaying entity from the moment the couple notifies IRS of marriage until the couple notifies IRS that the marital status has changed. However, FTB considers all individuals as unmarried. Each year, after a married couple files that year’s return, FTB updates their internal records with proper marital status for only that particular year. I believe that: 

1. FTB utilizes this loophole in the system in order to falsely impose penalties and fees via policy and procedure violations

2 FTB utilizes this loophole to unlawfully enrich themselves by demanding extra additional tax liability and penalty payments above and beyond what FTB knows — by its own records — is actually owed. 

3. This policy violates the 14th Amendment of the Constitution 
—

1. Policy and Procedure Violations

As records that came out in my San Diego Superior Court case, Grab v. Franchise Tax Board, have proven, FTB’s failure to recognize married couples as a single tax paying entity led to many policy/procedure irregularities. These irregularities are so egregious that they qualify as fraud and violation of taxpayer rights. 

When the IRS sends a notice, the notice is addressed to both spouses  and only one response is required. FTB sends two notices out — one for each spouse, and expects two responses. If one of the spouses does not respond, a liability or penalty is imposed, even if the other spouse responded. 

As I have documented in my Motion to Compel Further Response to Specially Prepared Interrogatories, Set #1: Clarification of Policies and Procedures (page 6, 22 – 26) and in exhibit 55 (page 2 – 5), that was attached to the Motion to Compel, FTB frequently classified the notices received from me as notices received from my spouse, then imposed penalties on me for “not responding” (and vice-versa). Or when I sent a joint response, FTB marked the response as from only one of us, then penalized the other for “not responding.” This was further documented in the Statements of Undisputed Facts and Supporting Evidence in Opposition to Motion for Summary Judgment that was also filed with the court (see SUF numbers 29 – 67). 

FTB utilized this practice of “misclassifying” notices to deny my husband and I our legal right to Protest the Notices of Proposed Assessment per R&TC Sections 21010 and 20102. Since this “misclassification” of notices happened more often than not on our accounts, it is clear that “misclassification” is a tool FTB systematically utilizes to violate taxpayer rights and to fraudulently impose penalties. The easiest way for legislators to force FTB to end this egregious fraud and violation of rights is to bring FTB in compliance with the IRS guidelines whereby FTB issues one joint notice and requires only one reply. 

2. Unlawful Enrichment

Here is an excerpt from my Motion to Compel Further Response to Specially Prepared Interrogatories, Set #1: Clarification of Policies and Procedures:

“According to the Taxpayer Advocate (exhibit 48, pages 21 – 22), if you are single and file late, the FTB will apply the estimated tax payments that were held in suspense to your account after the penalties, fees and interest are falsely imposed, but before you actually file that year’s tax return. So let’s pretend that you are single and you paid $10,000 in estimated tax payments that FTB withheld. You file late, and FTB imposes $2,000 in penalties, fees and interest for “underpaying.” Because you are single, FTB will then apply the $10,000 in estimated tax payments to your account and you only have to send in the $2,000 in penalties, fees and interest — and nothing more. 

However, FTB refuses to apply any estimated tax payments to married people until they actually file their returns. So let’s pretend you are married and that your joint tax liability is identical to the single person’s in the example above. You and your spouse paid $10,000 in joint estimated tax payments that FTB withheld from both of your accounts. You file late, and FTB imposes $2,000 in penalties, fees and interest on you for “underpaying” and another $2,000 on your spouse “for underpaying.” So already, the joint filers have to pay twice as much as the single filers in upfront penalties as compared to a single person, even though the tax liability is identical. I realize the penalty amount is later adjusted, but is it lawful to demand double the money upfront? 

FTB then demands that the married couple send FTB $14,000 “RIGHT NOW OR ELSE we will garnish your wages and levy your bank account!” (emphasis added to demonstrate the aggressive and coercive collection tactics that FTB utilizes to force compliance with the unjust demands for money). So if you are married, you also have to pay the original tax liability of $10,000 as if FTB had never received that $10,000, even though FTB has had that original $10,000 in their possession since the day that the money was due.” 

The mechanisms of how FTB goes about demanding monies that are not actually owed is documented in Statements of Undisputed Facts and Supporting Evidence in Opposition to Motion for Summary Judgment (see SUF numbers 1 – 28 and 170 – 268)

The easiest way for legislators to force FTB to end this egregious practice of unlawfully enriching itself is to bring FTB in compliance with the IRS guidelines whereby FTB recognizes the married couple as a single entity and imposes one tax liability on both spouses.

3. Violation of 14th Amendment of the US Constitution
Continuing with the quote above:

“I believe that treating married people in a way that financially penalizes them for being married is a violation of the Equal Protections Clause of the 14^th Amendment of the US Constitution, which states that the government has to treat all classes of people the same. Marital status does qualify as a class, and FTB readily admits that they do not treat the married class the same as they treat the single class. 

I believe that the years of unlawful harassment that my husband and I endured from FTB over the payments of monies that were never owed – by FTB’s own records – would not have occurred if my husband and I were cohabitating instead of legally married.” 

I believe that it is imperative that legislators recognize this violation of the federal law and immediately correct California State law to comply with federal law. 

I would encourage you to read the aforementioned court documents Statements of Undisputed Facts and Supporting Evidence in Opposition to Motion for Summary Judgment and Declaration of Christine N. Grab in Support of Motion to Compel Further Response to Specially Prepared Interrogatories, Set #1: Clarification of Policies and Procedures, along with  exhibits 48 and 55.  It is well worth your time to understand the shocking extent of FTB’s systematic accounting irregularities and violation of taxpayer rights. They can be downloaded from here: https://roa.sdcourt.ca.gov/roa/faces/CaseSearch.xhtml. The case number is year 2020, number 00005100. The Declaration is Item #39, and both exhibits are attached to the Declaration. The Statements of Undisputed Facts is item #86. 
I appreciate your attention to this matter and look forward to this item being corrected early in the 2023 legislative cycle. 
Regards, 

Christine Grab

Psalm 64